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Disentangling the Impacts of Environmental Contamination from Locally Undesirable Land-uses (LULUs) on Residential Property Values PowerPoint PPT Presentation


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Disentangling the Impacts of Environmental Contamination from Locally Undesirable Land-uses (LULUs) on Residential Property Values. Xiangping Liu, Laura Taylor, and Daniel Phaneuf June 25, 2010. Literature on Environmentally Contaminated Sites.

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Disentangling the Impacts of Environmental Contamination from Locally Undesirable Land-uses (LULUs) on Residential Property Values

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Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Disentangling the Impacts of Environmental Contamination from Locally Undesirable Land-uses (LULUs) on Residential Property Values

Xiangping Liu, Laura Taylor, and Daniel Phaneuf

June 25, 2010


Literature on environmentally contaminated sites

Literature on Environmentally Contaminated Sites

  • Use distance to a site listed on National Priority List (NPL) to proxy its impact

  • Study a single or several NPL sites in one area

    • Summarized in Kiel and Williams (2007)


Literature on environmentally contaminated sites contd

Literature on Environmentally Contaminated Sites, contd.

  • Heterogeneity of the impact by site

    • Kiel and Williams (2007; all NPL sites)

  • Stigma

    • Messer et al. (2006)

    • McCluskey and Rausser (2003)

    • Dale et al. (1999)


Our contribution

Our Contribution

  • Particular focus is to separate two impacts:

    • Contamination/cleanup (listing/delisting)

    • LULU (commercial or industrial properties)

  • Control for sites that are on both federal and state priority lists


Our contribution contd

Our Contribution, contd.

  • Use accurate site boundary rather than the centroid

  • Estimate heterogeneous impacts of site types

    • Commercial vs. industrial sites

    • Landfill, solvent, and military sites vs. other sites

  • Use parcel-level transaction data, with careful attention to local unobservable community characteristics


Identification strategy geographic matching

Identification strategy--geographic matching

  • Key issue: identify treated group & construct unobserved counterfactual for the treated observations.

  • Distance matters, but distance can be correlated with local unobservable characteristics.

    • Local community characteristics, if not controlled for, could bias the estimation.


Identification strategy contd

Identification strategy, contd.

  • Treated observations:

    • Residential properties within 0.3-mile buffer to the boundary of a listed site

    • Identify land-use of each listed site

  • Control observations:

    • Residential properties within 0.3-mile buffer to the boundary of a clean commercial/industrial (COM/IND) site

    • Identify land-use of each “clean” site

  • Match clean COM or IND sites to contaminated sites based on their spatial locations


Identification strategy geographic matching1

Identification strategy--geographic matching

  • Match treated & control observations based on their spatial locations:

    • Treated residential properties are within 0.3 mile buffer of listed site


Illustration of geographic matching

Illustration of geographic matching


Identification strategy geographic matching2

Identification strategy--geographic matching

  • Match treated & control observations based on their spatial locations:

    • Treated residential properties are within 0.3 mile buffer of listed site

    • Create buffer ring of 0.7-1.0 mile from boundary of listed site


Illustration of geographic matching1

Illustration of geographic matching


Identification strategy geographic matching3

Identification strategy--geographic matching

  • Match treated & control observations based on their spatial locations:

    • Treated residential properties are within 0.3 mile buffer of listed site

    • Create buffer ring of 0.7-1.0 mile from boundary of listed site

    • Any “clean” commercial/industrial site lying within buffer ring serves as a control com/ind site


Illustration of geographic matching2

Illustration of geographic matching


Identification strategy geographic matching4

Identification strategy--geographic matching

  • Match treated & control observations based on their spatial locations:

    • Treated residential properties are within 0.3-mile buffer of listed site

    • Create buffer ring of 0.7-1.0 mile from centroid of listed site

    • Any “clean” commercial/industrial site lying within buffer ring serves as a control com/ind site

    • Control residential properties are within 0.3-mile buffer of control com/ind site


Illustration of geographic matching3

Illustration of geographic matching


Identification strategy geographic matching5

Identification strategy--geographic matching

  • Match treated & control observations based on their spatial locations:

    • Treated residential properties are within 0.3-mile buffer of listed site

    • Create buffer ring of 0.7-1.0 mile from centroid of listed site

    • Any “clean” commercial/industrial site lying within buffer ring serves as a control com/ind site

    • Control residential properties are within 0.3-mile buffer of control com/ind site


Illustration of geographic matching4

Illustration of geographic matching


Heterogeneous effects and local community level unobservable

Heterogeneous effects and local community level unobservable

  • Conduct analysis for COM and IND sites separately

  • Examine the impact by site types, eg. landfill, solvent, military sites, and other sites separately

  • Control for site fixed effect

    • Check the robustness of the result by controlling both site fixed effect and local community characteristics


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Data

  • Study area: Minneapolis/St. Paul metropolitan statistical area, Minnesota

  • Contaminated sites: All sites listed on state or federal registers of contaminated sites.

    • 108 sites (51 listed after 1990 / 59 delisted after 1990)

    • Site boundaries (manual identification)

    • Land-use

    • Contaminate type

  • Residential property transactions 1990-2007

    • housing attributes: acres, # rooms, bedrooms, baths, age, school district.


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Data

  • Community characteristics:

    • Census demographics at block group level are compiled from Geolytics

  • Local land-use characteristics (within 0.5 miles or 1 mile)

    • % land in: commercial use; industrial use; residential use; apartments, open space, water, highway


Example of treated control residential properties

Legend

Control residential

Listed sites

Treated residential

Clean com/ind

Example of treated & control residential properties


Empirical specification

Empirical specification

  • Mathematical representation of estimating equations

    --Listing

    Ln(sales price)=α*treat+β*tl+γ*treat_tl

    +constant+α*X+ site fixed effect+ time effect…

    --De-listing

    Ln(sales price)=α*treat+β*tdl+γ*treat_tdl

    +constant+α*X+ site fixed effect+ time effect…


Preliminary sample results listing

Preliminary sample results: listing

  • All listed sites, no impact heterogeneity in land-use of site


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Preliminary sample results: listing, continued.

  • Heterogeneity by land-use: Commercial versus Industrial (all covariates & most recent transaction)


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Preliminary sample results: de-listing

All de-listed sites, no impact heterogeneity in land-use of site


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Preliminary sample results: de-listing, continued

  • Heterogeneity by land-use: Commercial versus Industrial (all covariates & most recent transaction)


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Preliminary sample results: landfill, solvent, military sites separately

  • Heterogeneity by site types: Landfills, solvent sites and military sites (all covariates & most recent transaction)


Conclusion

Conclusion

  • The effect of contamination--listing a site reduces nearby residential property value 3-7 %

  • The listing has larger impact on residential property surrounding a industrial site than a commercial site

    • about 7-12% for a COM site

    • 47% an IND site

  • Delisting some NPL/PLP sites improves nearby residential property by 5%.

  • However, there exist stigma effect of cleanup on the nearby residential property for the landfill sites.


Work to do

Work-to-do

  • Matching NPL/PLP sites based on local community characteristics rather than geographical location (a propensity score matching or matching on local community characteristics directly). This method allows us to further check how strong local community characteristics or unobservables affect estimation results.

  • Separate regressions for detached residential properties, townhouse, and condo


The end thank you

The EndThank you!


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Preliminary sample results: de-listing, continued

  • Heterogeneity by land-use: Commercial versus Industrial (all covariates & most recent transaction)


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Preliminary sample results: de-listing, continued

De-listed sites, exluding landfill, solvent & military sites


Disentangling the impacts of environmental contamination from locally undesirable land uses lulus on residential property values

Preliminary sample results: de-listing, continued

De-listed sites, only landfill, solvent & military sites


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